Sippy Films challenges order asking it to pay Rs2 crore

Sippy Films challenged the decision of arbitrator directing it to pay over Rs2 crore to Nimbus Communication for failing to air a serial in 1991 as per their agreement.
 
An agreement was signed between Sippy Films and Nimbus Communications in 1990, by which the telecast rights were given to the latter for a consideration. According to the agreement, Sippy Films was to telecast a serial Bandhan on Doordarshan (DD). The first episode of the serial was to be telecast by January 15, 1995.
 
In April 1991, Nimbus also paid Rs75 lakh to Sippy Films towards advance consideration.
 
The discussions went on with the DD from 1991 till 1995 to acquire a prime slot for airing the serial. However, nothing worked out, argued Sharan Jagtiani, advocate for Sippy Films.
 
Since Sippy Films failed to keep the commitment and air the serial latest by 1995, Nimbus sent a demand notice asking refund of its Rs75 lakh.
 
Saying that the demand was barred by limitation, Sippy Films invoked arbitration clause. An arbitrator was appointed who passed an order in favour of Nimbus.
 
The arbitrator also directed Sippy Films to pay interest at the rate of 18% since the date of demand notice.
 
The arbitrator held, "the petitioner (Sippy Films) himself had promised that by January 15, 1995 the serial will be telecast and therefore, when the petitioner failed to do that the cause of action for demanding money back arose, and therefore, reference in July,1995 will be within limitation."
 
Sippy Films then challenged the order of the arbitrator before high court.
 
Justice DK Deshmukh on June 24, 2011, ruled in favour of Sippy Films. The judge also upheld the interest stating the agreement between Sippy Films and Nimbus provides for refund of amount with interest at 18% per annum. "Obviously, therefore, the interest will have to be awarded from the date on which the advance is given," observed the single judge.
 
Aggrieved, Sippy Films has filed an appeal before the division bench.
 
A division bench of justice DD Sinha and justice VK Tahilramani has reserved the matter for order.